Pertamina eyes alliances with foreign firms
Pertamina eyes alliances with foreign firms
KUALA LUMPUR (Dow Jones): Indonesia's state-run Pertamina
plans to reshape its upstream operations following the passage of
the oil and gas bill by forming alliances with foreign partners
and aggressively participating in domestic and overseas oil and
gas projects, Gatot K. Wiroyudo, senior vice president of
Pertamina's upstream operations said Tuesday.
"Currently, Pertamina produces 180,000 barrels (a day) of oil
equivalent, which includes gas," Gatot said on the sidelines of
the three-day Sixth annual Asia Oil and Gas Conference in Kuala
Lumpur.
"We will acquire reserves not necessarily domestic and also
through cooperation with foreign firms," he added.
Gatot reiterated that Pertamina aims to become Indonesia's
second largest oil producer within five years, which he said will
require Pertamina raising its production capacity by 40% within
that time frame.
PT Caltex Pacific Indonesia, a joint venture between Chevron
Corp. and Texaco Inc., is the country's largest oil producer with
a total production capacity of about 700,000 barrels per day.
Indonesia's crude output in May averaged 1.234 million barrels
per day.
During a conference panel discussion Tuesday, Gatot said
Pertamina is looking for ways to develop projects in cooperation
with Malaysia's Petroliam Nasional Bhd., or Petronas, and Indian
Oil Corp.
"We will seek bilateral and multilateral cooperation in this
sector," he said.
He said Pertamina will consider oil and gas exploration and
production projects in North Africa, the Middle East and
Southeast Asia.
Pertamina's President and Chief Executive Baihaki Hakim said
Monday that he expected the Indonesian Parliament to make a final
vote on the oil and gas bill aimed at opening the country's
downstream sector to competition and privatizing Pertamina in
August. However, most analysts believe this is likely to occur in
the late third or fourth quarter this year at the earliest.
Once the oil and gas bill is ratified, Pertamina will no
longer supervise Indonesia's production sharing contracts; it
will be competing with international oil majors for the same
contracts.
Gatot said the blueprint for the restructured oil and gas
industry also allows for participation of the provincial
governments and won't require any adjustment in production
sharing contracts.
"I visualize that when we develop a production facility or
pipelines, we will need a certain parcel of land; a certain
degree of involvement by the local government at the operational
level is seen," he said. "A certain degree of ownership from the
local provincial government is needed to maintain and keep
security."
Gatot said Indonesia currently holds recoverable oil reserves
of 9 billion-10 billion barrels, reiterating Baihaki's remarks
Monday that by 2005 to 2006 Indonesia's oil production and
capacity will dry up.
"The Indonesian domestic market is increasing by 7% a year, so
sooner or later, we will be a (net) importer rather than exporter
of crude oil," Gatot said.
Baihaki said Monday during a panel discussion that Indonesia
"naturally, in that case...shouldn't be a member of the
(Organization of Petroleum Exporting Countries)."
When asked if Pertamina was concerned that provincial unrest
would frighten away foreign investment into Indonesia's upstream
sector, Gatot said the disturbances were temporary and expected
to be resolved in the next few months.
ExxonMobil Oil Indonesia Corp., a unit of Exxon Mobil Corp.
(XOM), shut operations at its Arun gas field in early March
citing disintegrating security in restive Aceh province.
Caltex Indonesia has seen production disrupted by strikes,
blockades of facilities and theft of equipment over the past 18
months. Caltex, which operates on the island of Sumatra, says
that villagers steal about $1 million of power cables, pipe and
aluminum sheeting on pipelines each month. Last year, Caltex
estimates that theft cost the company $300 million of oil
production, and this year the company forecasts an increase to
$500 million.